Question 1

The purpose of an economic model is to

Accepted Answer

A)  be a complex, exact replica of reality. 
B)  demonstrate which values and beliefs are best for the economy. 
C)  make predictions about the real world. 
D)  manage the economy like an automatic pilot. 
E)  set the prices in a price system. 
A)  be a complex, exact replica of reality. 
B)  demonstrate which values and beliefs are best for the economy. 
C)  make predictions about the real world. 
D)  manage the economy like an automatic pilot. 
E)  set the prices in a price system.

Question 2

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families:
  
-The evidence presented in the graph indicates that

Accepted Answer

A)  all families at a given income level spend the same amount on food. 
B)  the amount of household income depends on the amount of household food expenditures. 
C)  an inverse relationship exists between the two variables. 
D)  for the families included in the study, no relationship exists between food expenditures and income. 
E)  if income falls an average of $15,000, annual food expenditures will fall an average of $2,500. 
A)  all families at a given income level spend the same amount on food. 
B)  the amount of household income depends on the amount of household food expenditures. 
C)  an inverse relationship exists between the two variables. 
D)  for the families included in the study, no relationship exists between food expenditures and income. 
E)  if income falls an average of $15,000, annual food expenditures will fall an average of $2,500.

Question 3

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families:
  
-From the graph it can be seen that,on average,a lower-income family spends

Accepted Answer

A)  a higher percentage of its income on food than a higher-income family. 
B)  a lower percentage of its income on food than a higher-income family. 
C)  the same percentage of its income on food as a higher-income family. 
D)  a different percentage of its income on food than any other family with the same income. 
E)  too much of its income on food. 
A)  a higher percentage of its income on food than a higher-income family. 
B)  a lower percentage of its income on food than a higher-income family. 
C)  the same percentage of its income on food as a higher-income family. 
D)  a different percentage of its income on food than any other family with the same income. 
E)  too much of its income on food.

Question 4

The following question are based on the following diagram:
  
-If the economy currently produces 4 million units of consumer goods and 2 million units of defense goods

Accepted Answer

A)  it is operating on its production possibilities curve. 
B)  there must be unemployment of resources. 
C)  it is producing a combination that requires more resources than it has. 
D)  it is achieving economic but not technical efficiency. 
E)  defense goods are preferred to consumer goods. 
A)  it is operating on its production possibilities curve. 
B)  there must be unemployment of resources. 
C)  it is producing a combination that requires more resources than it has. 
D)  it is achieving economic but not technical efficiency. 
E)  defense goods are preferred to consumer goods.

Question 5

According to Richard Gill in the Economics U$A video,the opportunity costs for preserving the Alaskan wilderness are measured by the loss of

Accepted Answer

A)  worker health benefits in textile manufacturing. 
B)  minerals rendered unavailable for development. 
C)  wilderness areas in the lower 48 states. 
D)  tax revenues to the federal government. 
E)  foreign oil because of the cutback in OPEC oil production. 
A)  worker health benefits in textile manufacturing. 
B)  minerals rendered unavailable for development. 
C)  wilderness areas in the lower 48 states. 
D)  tax revenues to the federal government. 
E)  foreign oil because of the cutback in OPEC oil production.

Question 6

Propositions in positive economics

Accepted Answer

A)  can be tested by comparisons with facts. 
B)  yield results that depend on individual values or preferences. 
C)  are rarely agreed to by both conservative and liberal economists. 
D)  make statements about what ought to be. 
E)  are generally identical to those of normative economics. 
A)  can be tested by comparisons with facts. 
B)  yield results that depend on individual values or preferences. 
C)  are rarely agreed to by both conservative and liberal economists. 
D)  make statements about what ought to be. 
E)  are generally identical to those of normative economics.

Question 7

Societies must choose how to use available resources because

Accepted Answer

A)  most resources are not owned by anyone. 
B)  the capacity to produce goods and services is unlimited. 
C)  in the aggregate human wants are insatiable. 
D)  otherwise resource prices would be zero. 
E)  technological progress wastes resources. 
A)  most resources are not owned by anyone. 
B)  the capacity to produce goods and services is unlimited. 
C)  in the aggregate human wants are insatiable. 
D)  otherwise resource prices would be zero. 
E)  technological progress wastes resources.

Question 8

For an economy at full employment to increase its per capita growth rate,it must

Accepted Answer

A)  operate inside its production possibilities curve. 
B)  devote more resources to the production of capital goods. 
C)  shift the production possibilities curve inward. 
D)  ignore the central questions. 
E)  maintain existing levels of consumer production. 
A)  operate inside its production possibilities curve. 
B)  devote more resources to the production of capital goods. 
C)  shift the production possibilities curve inward. 
D)  ignore the central questions. 
E)  maintain existing levels of consumer production.

Question 9

Proposed causes of the Great Recession include all of the following EXCEPT

Accepted Answer

A)  irresponsible lending practices. 
B)  the bubble mentality. 
C)  high interest rates implemented by the Federal Reserve. 
D)  legislation promoting home ownership. 
E)  unencumbered access to global capital markets. 
A)  irresponsible lending practices. 
B)  the bubble mentality. 
C)  high interest rates implemented by the Federal Reserve. 
D)  legislation promoting home ownership. 
E)  unencumbered access to global capital markets.

Question 10

If at full employment,defense goods production increases from 2 million units to 3 million units,the cost would be ________ units of consumer goods.

Accepted Answer

A)  zero 
B)  0.5 million 
C)  1 million 
D)  2 million 
E)  5 million 
A)  zero 
B)  0.5 million 
C)  1 million 
D)  2 million 
E)  5 million

Question 11

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families:
  
-Family B

Accepted Answer

A)  spends less than family A on food. 
B)  has a higher income than family A. 
C)  spends more than its income on food. 
D)  spends about the same amount on food as the average family. 
E)  spends a higher percentage of its income on food than family A. 
A)  spends less than family A on food. 
B)  has a higher income than family A. 
C)  spends more than its income on food. 
D)  spends about the same amount on food as the average family. 
E)  spends a higher percentage of its income on food than family A.

Question 12

Over time the U.S.economy has had

Accepted Answer

A)  fluctuations in growth. 
B)  full employment without serious inflation. 
C)  continuous growth in output per person. 
D)  persistent deflation. 
E)  steadily increasing unemployment. 
A)  fluctuations in growth. 
B)  full employment without serious inflation. 
C)  continuous growth in output per person. 
D)  persistent deflation. 
E)  steadily increasing unemployment.

Question 13

Understanding poverty involves understanding those social mechanisms underlying the

Accepted Answer

A)  banking system. 
B)  distribution of income. 
C)  stock market. 
D)  rate of inflation. 
E)  balance of payments. 
A)  banking system. 
B)  distribution of income. 
C)  stock market. 
D)  rate of inflation. 
E)  balance of payments.

Question 14

An economy operating inside its production possibilities curve is most likely

Accepted Answer

A)  at full employment. 
B)  using resources inefficiently. 
C)  being forced to give up the production of one good to get more of another good. 
D)  facing a bowed-in curve. 
E)  producing no capital goods. 
A)  at full employment. 
B)  using resources inefficiently. 
C)  being forced to give up the production of one good to get more of another good. 
D)  facing a bowed-in curve. 
E)  producing no capital goods.

Question 15

In recent years,one characteristic of the growth process in the emerging market economies has been the

Accepted Answer

A)  volatility of and bumpiness experienced in the growth path. 
B)  inability of any of these countries to close the gap. 
C)  need to rely heavily on central planning and state-owned enterprises to make it work. 
D)  fact that it has been limited exclusively to economies in the Western Hemisphere. 
E)  absence of any currency crises. 
A)  volatility of and bumpiness experienced in the growth path. 
B)  inability of any of these countries to close the gap. 
C)  need to rely heavily on central planning and state-owned enterprises to make it work. 
D)  fact that it has been limited exclusively to economies in the Western Hemisphere. 
E)  absence of any currency crises.

Question 16

A theory composed of a number of assumptions from which predictions are deduced is called a(n)

Accepted Answer

A)  statistic. 
B)  event. 
C)  conclusion. 
D)  model. 
E)  allegory. 
A)  statistic. 
B)  event. 
C)  conclusion. 
D)  model. 
E)  allegory.

Question 17

Opportunity cost

Accepted Answer

A)  is the production forgone from the best alternative use of a resource. 
B)  reduces the need to make choices. 
C)  applies only to allocating capital. 
D)  is another name for the "invisible hand." 
E)  is greater for free resources than for economic resources. 
A)  is the production forgone from the best alternative use of a resource. 
B)  reduces the need to make choices. 
C)  applies only to allocating capital. 
D)  is another name for the "invisible hand." 
E)  is greater for free resources than for economic resources.

Question 18

A country's standard of living is closely correlated with its

Accepted Answer

A)  physical size. 
B)  population density. 
C)  mineral resources 
D)  cultural diversity. 
E)  labor force productivity. 
A)  physical size. 
B)  population density. 
C)  mineral resources 
D)  cultural diversity. 
E)  labor force productivity.

Question 19

The fact that initial improvements in the health of cotton textile workers were far less costly to achieve than the final stages of compliance with OSHA regulations illustrates that typical production possibilities curves are

Accepted Answer

A)  vertical. 
B)  horizontal. 
C) bowed in. 
D)  bowed out. 
E) upward sloping to the right. 
A)  vertical. 
B)  horizontal. 
C) bowed in. 
D)  bowed out. 
E) upward sloping to the right.

Question 20

The activities of a self-employed physician in running a medical practice would be considered

Accepted Answer

A)  free resources. 
B)  labor. 
C)  land. 
D)  capital. 
E)  technology. 
A)  free resources. 
B)  labor. 
C)  land. 
D)  capital. 
E)  technology.

Exam 1: What is Economics

The purpose of an economic model is to

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families: -The evidence presented in the graph indicates that

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families: -From the graph it can be seen that,on average,a lower-income family spends

The following question are based on the following diagram: -If the economy currently produces 4 million units of consumer goods and 2 million units of defense goods

According to Richard Gill in the Economics U$A video,the opportunity costs for preserving the Alaskan wilderness are measured by the loss of

Propositions in positive economics

Societies must choose how to use available resources because

For an economy at full employment to increase its per capita growth rate,it must

Proposed causes of the Great Recession include all of the following EXCEPT

If at full employment,defense goods production increases from 2 million units to 3 million units,the cost would be ________ units of consumer goods.

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families: -Family B

Over time the U.S.economy has had

Understanding poverty involves understanding those social mechanisms underlying the

An economy operating inside its production possibilities curve is most likely

In recent years,one characteristic of the growth process in the emerging market economies has been the

A theory composed of a number of assumptions from which predictions are deduced is called a(n)

Opportunity cost

A country's standard of living is closely correlated with its

The fact that initial improvements in the health of cotton textile workers were far less costly to achieve than the final stages of compliance with OSHA regulations illustrates that typical production possibilities curves are

The activities of a self-employed physician in running a medical practice would be considered

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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